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The best online payment apps for small businesses

Online payments are more popular than ever, and there are a lot of apps that can help you deal with them. Here, we summarise some of the best.

7 min read

As of 2018, 87% of all purchases in the UK were made online. That number has only increased, with more and more customers preferring online payments.

If you’re starting your own business in the UK, then, you’ll need to be able to take online payments. In this article, we take you through the basics and summarise some of the different options available.

How to take payments online

There are a few different ways to handle online payments.

  • Bank transfers are simple and understandable, but can seem unprofessional.

  • Direct debits allow customers to set up a recurring payment, usually monthly. They’re good for subscriptions, but not much use for one-off purchases.

  • Card payments are the most popular way for businesses to take online payments, and they’re what we’ll be focusing on here.

Card payments are handled through online payment systems and can be made using a debit or credit card or directly from a customer’s bank account.

We’ll look at how to set up a payment system below, but you should know from the outset that however you do this, you can adopt a payment structure that suits your business, from fixed monthly fees to pay-as-you-go models.

Typical fees are:

  • set-up: £20–£50 

  • transactions: 10p–30p per transaction 

  • percentage of monthly sales: 1.9%–4.0%

How do online payment systems work?

An online payment system is usually made up of three elements:

  • a payment gateway, which sends payments to the processor 

  • a payment processor, which handles the actual transaction 

  • a merchant bank, into which the customer’s funds are deposited before they are transferred to your business bank account

All-in-one payment systems provide all these elements in a single package, and almost all systems make integration quick and painless.

Benefits of online payments

Online payment systems make selling quick and easy, and provide good security on both ends.

Payment card industry regulations require all online payments to be SSL (secure socket layer) encrypted. Most systems will have their own SSL certificate, while website builders like Squarespace or Wix make it easy for you to get your site SSL certified.

Mobile payment systems

As smartphone security improves, more and more people are using their mobile devices for payments. Adopting these systems for your business can make dealing with customers easier and quicker than ever.

Types of mobile payment include:

  • QR code payments - customers have to scan a QR code to open a payment window

  • mobile-to-mobile payments - allow for quick and secure payments using a mobile number but are less common in business

  • magnetic secure transmission (MST) and near-field communication (NFC) payments - these require a physical device 

Each of these is useful for in-person transactions, but mobile payments are also available online. Many online payment apps allow customers to use their mobile to complete their purchase, and most browsers allow mobile users to enter their card details as they would on a desktop.

How to set up an online payment system

When it comes to setting up an online payment system, businesses have several options.

Opening a merchant bank account

A merchant bank acts as a go-between, taking care of things like authentication.

Businesses choose the card companies they’ll work with and set up an account. When customers pay, they send money to the merchant bank, which then releases it into the business’s account.

The major advantage of this method is that it works out cheaper in the long term, as the merchant bank’s monthly and transaction fees are generally lower than those involved in other options.

However, merchant banks also require you to sign a multi-year contract, and the process can be time-consuming.

Using an e-commerce platform

Platforms like eBay and Etsy have built-in payment processors. While you’re unlikely to see many big businesses using these sites, they can be perfect for small shops or self-employed sole traders.

Using an online payment app

This is perhaps the best option for small businesses, as it lets you get set up and start accepting payments quickly and easily. 

While transaction fees are high, using online payment apps can actually be cheaper for new businesses than setting up a merchant bank account.

In many cases, it’s best to start with a payment app and shift to a merchant bank account later on, when you’re more established.

General tips

If you need help deciding which payment system is best for you, consider the following questions:

  • What kind of monthly transaction volume do I expect?

  • How much would I be expecting to pay in fees?

  • How much customer support do I want?

  • Does this payment system suit my business model (e.g. ecommerce or subscription)?

  • Can this payment system connect directly to QuickBooks?

Startups.co.uk and Merchant Savvy offer helpful comparisons of secure payment systems that might be suitable for your small business.

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Online payment apps that integrate with QuickBooks

Consider these online payment apps for your business - all of them can integrate with QuickBooks.

PayPal

Pros:

  • well known and trusted 

  • available worldwide: doesn’t confine your business by location

  • offers discounts on ecommerce platforms

  • offers business solutions including the PayPal Business Debit Mastercard and PayPal Here Card Reader

  • customers don’t need a PayPal account to use it

Cons:

  • relatively expensive fees on PayPal Wallet and American Express payments - however, QuickBooks customers get a special low PayPal rate on debit and credit card transactions - find out more 

GoCardless

Pros:

  • offers a very low fee of 1% per transaction, from a minimum of 20p to a maximum of £2 

Cons:

  • less flexibility in terms of functionality

  • less scalability than other options: not ideal for growing businesses

Worldpay

Pros:

  • the biggest payment management system in the UK 

  • can take payments from all major debit and credit cards, as well as 

Cons:

  • its fees are less transparent than others’: prospective clients must request a quote 

  • can be expensive: pay-as-you-go fees are 2.75% + 20p per transaction

Shopify

Pros:

  • comprehensive payment platform, offering integration with other channels such as Amazon as well as web hosting and payment processing 

  • easy to use and popular

Cons:

  • transaction fees range from 2.2% + 20p for a basic service to 1.6% + 20p for a more comprehensive one 

  • monthly fees charged on top of transaction fees make it one of the more expensive options

Stripe

Pros:

  • simple to use 

  • lets you customise customers’ checkout experience 

  • can set up recurring billing and direct debits 

  • less expensive than others, with a flat rate of 1.4% + 20p per transaction for European cards 

  • no monthly or hidden fees

Cons: 

  • an increased rate of 2.9% + 20p for non-European cards 

  • you need to provide your own website and shopping cart software to use it online

Amazon Pay

Pros:

  • globally recognised 

  • customers don’t need an account 

  • can integrate with your existing payment platform or work as a standalone 

  • especially good for those with higher volumes of sales, with fees reducing hugely for sales above £55,000

Cons: 

  • can be prohibitively expensive for smaller businesses: fees start from 3.4% + 20p for sales volumes of less than £1,500

Directli

Pros:

  • offers the same low rates as GoCardless 

  • good at accommodating price fluctuations

Cons:

  • less useful for businesses where the price of goods or services is fixed

How long do online payments take to process?

Although the specifics may vary, merchants usually receive a payment anywhere from 24 hours to three days after customers send it. This means that online payments aren’t just quick for customers, but can usually get the money into your business’s account more quickly than if you were depositing cheques or cash.

What’s next for your business?

We hope you’ve found this guide to online payments useful. If you need more help in the process of starting your own business, our latest questionnaire can provide you with a personalised to do list to ensure you don’t miss out on any crucial steps. Complete the questions honestly to see exactly where you’re at.